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Month: January 2014

Ok, where are the home sellers? Are you hesitating to sell because you don’t know what to do with all of your stuff? Afraid you won’t be able to find a new home? I have solutions for both. I sound like broken record but this is a supply and demand business and there is no supply. We have a TOTAL of 59 single family listings in Newton. A normal /good market would usually have 200 listings more or less. During the debacle we were approaching 400 listings…..we currently have 59! Average houses are receiving multiple offers.

A breakdown…

ON MARKET

Total Homes 59

Under 1M 18

1M – 1.5M 13

1.5 – 2M 9

Over 2M 19

UNDER AGREEMENT

Total 61

Under 1M 38

1M – 1.5M 9

1.5M – 2M 8

Over 2M 6

Every number tells a story and this is no different. Houses over 2 million are not selling so quickly and buyers definitely like new when we get up into those prices. With lots selling in great locations over 1.5 it’s hard to imagine being able to sell a new house for less than 3 million. Clearly houses under 1 million are in an appreciating market. Under agreements out number currently listed by 2-1 tipping the scale to market appreciation. As you can see 1M – 2M is more stable with a similar amount for sale and under agreement. The over two million is the problem area, homes for sale are out pacing under contracts by a 3-1 margin suggesting a depreciating market. There are MANY buyers looking to spend over 2 million for a home (seriously) but a buyer must perceive value. It is also true that buyers over 2 million like new or completely renovated homes. They will not pay top dollar to renovate a home. Every home fits into a price category depending on location, size, condition, side street or busy street, convenience, etc …there are a few outliers, but very few. Every house has a price so call me to find out yours.

I know this is totally off topic for me but this needs to be shared! My friend Erin Gate of Erin Gates Design — (definitely check out her amazing blog Elements of Style) This Saint Laurent ad is so completely dangerous to a young girls way of thinking that I had to repost.

FROM ERIN…………

Two days ago I was perusing my feed on Facebook when an image a friend/colleague posted stopped me in my tracks. I clicked on it to get a better look and was beside myself to see that this image of what I thought was a severely anorexic or sick woman was in fact an ad from Saint Laurent’s spring campaign. Before I continue take a look:

To be honest, I almost didn’t believe it. I knew that before I could write anything about it I had to confirm it was real first, even though the source of the Facebook image was a trusted one. I have made the mistake of skipping this step before and learned my lesson from it. Sadly, I confirmed it yesterday by going to Barnes & Noble and seeing it in person in the February issue of Harper’s Bazaar. I don’t even know where to begin to describe my rage and disgust over this image.

But let’s start with this. There is a picture of me taken about two weeks before I was committed to a mental hospital for my anorexia that looks like this picture. Less glamorous, for sure, but the knobby knees, reed thin thighs and sunken eyes are the same. I was about 95 pounds and 5′ 9″ to put this model in perspective (if I could find it I would post it). I am not saying definitively that she is sick, nor am I “thin shaming” anyone, but I AM suggesting that to portray this image as glamorous and high fashion is brutally irresponsible and dangerous. Yes, there are members of society who are naturally very thin or drastically underweight due to illness or factors beyond their control (like the fabulously inspiring Lizzie Velasquez), but that is not what is being presented here. This is the kind of image that could (and will) be circulated on the bevy of pro-anorexia sites out there as an example of extreme thinness promoted and accepted by the fashion industry. Even more heartbreaking is the idea that young girls everywhere, otherwise healthy girls, may see this during a time in their life when they are easily influenced and allow it to make them feel badly about their bodies. It could ignite a dark place inside one of them, a thought, a behavior, a pattern, that could spiral into something devastating. Just as it was ignited in me.

No, one ad will not cause someone to be anorexic, but our society’s ideals and attitudes towards what is a beautiful body could. No one could pinpoint what exactly it was that caused me to fall ill- I was never abused, neglected, bullied or tormented I was just like any other young girl. But one day I started comparing myself to others and thought maybe I should lose some weight. And then some more. And then even more. Until the prospect of having to eat a single strawberry would reduce me to hysterical sobs of fear. And this was during a time when models like this were not part of mainstream media- in fact, today the girls I admired on TV in the early 90′s would probably be considered “chubby”. If we allow these kinds of images to become acceptable I am scared of what the future holds for young women- our daughters, nieces and grandchildren. THIS IS NOT OKAY.

Years ago I went to talk by the Council of Fashion Designers of America at Mass General’s Eating Disorders Program in which some famous designers made all sorts of claims about committing to using healthier models in an attempt to promote a more wholesome body image and protect the young models who feel forced to be a certain kind of drastically thin in order to get work. Well, it seems those statements and assertions were not ones they took seriously. This image had to go through SO MANY hands to be approved to run in Bazaar- the fashion house, their marketing department, the model management, PR people, the photographer, producers, magazine editors and publishers. This model was lit purposely to exaggerate her breathtaking thinness. The fact that this was PERMITTED to be published is flat out disgusting. The fact that all these powerful people in the media could look at this and think “Yes, let’s put THIS out into the universe” is baffling. To be in a women’s magazine is doubly insulting.

For all the progress that the fabulous pro-women ads from Dove and others out there have made, one like this can set us so many steps back. I have no idea how we can affect change in the fashion industry, but I certainly hope that small efforts to stand up to things like this are a place to start.

Face it… the Internet has eliminated lots of “middlemen.” When was the last time you used a travel agent? How often do you call your stockbroker?

By consuming “direct” online, not only do you get to pocket middlemen fees; in most cases, it’s much more convenient.

When home search websites started popping up in the late 1990s, “experts” from Inman to newspapers were predicting the demise of the real estate agent. Online discount brokerages like ZipRealty and Redfin offered sizable rebates to consumers as a benefit of online efficiency.

Heck, if homebuyers can find homes for sale on their own and save many tens of thousands of dollars, who needs a real estate agent anyway? This disintermediation would certainly put agents out of business. Wouldn’t it?

Evidently NOT!

While it’s true that the vast majority of today’s homebuyers search online for homes, a record percentage of them continue to use their local real estate agent to close the transaction. Even Redfin and ZipRealty have all but abandoned their commission rebate programs in favor of a more traditional brokerage approach.

The data clearly shows that despite the huge rise in online home search, consumers are using real estate agents in record numbers to close the transaction. Why?

For most people, buying or selling a home is a rare event. On average, people keep their home for seven years. It is simply an unfamiliar process.

There is a large amount of money at stake. If people are at all insecure about their ability to handle the transaction, they will not risk making a mistake with this amount of money on the line.

Real estate is not a commodity. Unlike airline tickets, every deal is different and complicated with many unique emotional and legal factors.

It’s a people business. A well-connected agent makes all the difference in finding that best house or that best buyer.

Agents bring critical local market knowledge. What’s going on in the area? What specific factors most affect value? What’s the agent on the other side of the transaction like to deal with?

Access to Pre-MLS and Non-MLS (pocket) listings. Well-connected agents, such as Top Agent Network members, have special access to properties for sale and motivated buyers that can’t be found elsewhere.

Cutting out the agent may not save the consumer any money. Both the buyer and seller expect to pocket the commission savings. Plus, did you pay too much for the house, or sell too low?

Difficult for buyers and sellers to deal directly with each other. It’s an emotional process. Egos and tempers can flare. Good agents buffer and negotiate issues that buyers and sellers mess up when dealing directly.

The skilled, experienced, well-connected value-adding real estate agent is not going away any time soon! And whereas Inman once predicted the demise of the real estate agent, it is now publishing works of contributors who tend to agree.

If you are a buyer or seller who tried to “go it alone,” what was your experience? Agents, what are your thoughts?

I believe the biggest issues buyers have going it alone is the very real fear that they won’t get their deposit money back if the deal falls apart. Buyers looking to spend 1.5 million suddenly get nervous when they have to write the $1000.00 good faith check.

THE TRUTH IS YOU ARE NOT SAVING ANY MONEY. THE LISTING FIRM HAS A CONTRACT WITH THE SELLER TO PAY A SPECIFIED COMMISSION PERCENTAGE. BY GOING IT ALONE YOU ARE EFFECTIVELY PAYING THE LISTING FIRM DOUBLE — WHILE HAVING NO REPRESENTATION!

5 THINGS TO WATCH IN HOUSING IN 2014

For housing, it was a tale of two halves in 2013. During the first half, unusually low supplies of homes and low rates spurred bidding wars, pushing prices up sharply. During the second half, the frenzy cooled amid a sudden spike in interest rates. While more markets are now reporting increases in inventory, the number of homes for sale remains quite low.

The bull case for 2014 goes something like this: those low inventories will support rising prices.

Below-average levels of household formation, the argument goes, must ultimately pick up, boosting construction. Mortgage rates, while higher, are still historically low. Credit standards will stop getting tighter, and might loosen as home prices rise. Finally, mortgage delinquencies are dropping. While some states still have elevated foreclosure inventories, the worst of the distressed-housing problem is in the rear-view mirror.

The bear case, meanwhile, says that the recovery is a mirage built on the back of the Federal Reserve’s stimulus that has done little more than inflate asset values, including home prices.

Record low interest rates, the argument goes, unleashed demand from both borrowers and all-cash investors seeking returns on something—anything—with a decent return. These investors built large rental-home companies that remain untested at scale. How can first-time buyers take the baton from investors at a time when prices are up almost 20% in two years and when interest rates are rising?

Other problems loom: Mortgage rates could jump, choking off housing demand and curbing new construction that remains mired at 50-year lows. Investors could unload their homes if the rental-home thing doesn’t pan out. And don’t look for much help from mortgage lenders that face a cocktail of new regulations, which could keep credit standards stiff.

So which view will carry the year? Here are five wild cards to watch this year:

1WILL INVENTORY RISE?

Prices have risen largely because of shortages of homes for sale. While there is growing evidence that inventories hit bottom last year and that some markets are moving back in favor of buyers, the number of homes for sale remains relatively tight still. Foreclosure-related listings have plunged, and traditional buyers haven’t flocked to list homes—at least not yet. New construction, meanwhile, won’t be back to normal historical levels for years. The consensus view is that price growth continues at a somewhat slower pace, but that consensus view could be wrong—for the third year in a row—if there aren’t more homes for sale.

2WHERE IS THE HOME-CONSTRUCTION RECOVERY?

While home prices have recovered strongly, new construction activity hasn’t. Part of this may have to do with the fact that home prices are still too low to justify construction, particularly given land, labor, and materials costs. For smaller builders, credit may also be harder to come by. Some economists say new-home demand could remain muted because many move-up buyers don’t have enough equity to “trade up” to that new home. Key issues to watch here: What happens to household formation, and do builders begin to throttle back price gains in favor of selling more homes in 2014?

3WHAT HAPPENS TO MORTGAGE CREDIT?

Lenders could begin to ease certain “overlays”—or additional credit and documentation checks—that have been imposed over the past few years. Mortgage insurance companies are getting more comfortable insuring loans with down payments of just 5%. So don’t be surprised if, at the margins, it gets a little easier to get a mortgage—especially if you have lots of money in the bank.

Even if it gets easier to get a loan—by no means a given—borrowing costs and fees could rise. Banks also face new mortgage regulations that could keep most of them cautious. Borrowers with more volatile or harder-to-document incomes, including the self-employed or those who make a lot of money on commissions, bonuses, or tips, could continue to face tough sledding.

Bloomberg News

4WHAT WILL INVESTORS DO WITH THEIR HOMES?

A handful of institutional investors have purchased tens of thousands of homes that are being rented out. These homes tend to be concentrated in a few of the regions that have been hardest-hit by foreclosures over the past five years. Investor purchases played key roles in stabilizing prices, especially because investors were wolfing up homes at a time when supplies were already dwindling. A key question now is what happens after the initial rush to invest subsides. More lenders and investors are extending debt financing to some of these property owners, which should help boost returns. Can owners perfect the expense management associated with maintaining and leasing tens of thousands of individual homes?

Can owners perfect the expense management associated with maintaining and leasing tens of thousands of individual homes?

5WHEN DOES HOUSING HIT A TIPPING POINT ON AFFORDABILITY?

Rising home prices are a double-edged sword, especially in pricier coastal markets such as San Francisco and Los Angeles. On the one hand, rising prices are giving many homeowners equity in their homes again—an extremely positive development to the extent it means these borrowers are less at risk of foreclosure.

But price inflation is making housing less affordable. This will be a bigger problem if cash buyers retreat from the market in 2014 and/or if interest rates rise in a meaningful way. Consider: In Los Angeles, prices have jumped by nearly 30% in the past two years, to a median of $448,900 in the third quarter. Assuming a 20% down payment, the monthly payment of principal and interest on the median priced home has jumped from $1,255 in the third quarter of 2011 to $1,823 in 2013—a 45% increase.

The following article is a reprint from the KCM Crew (Keeping Current Matters). I respect their content and attitudes but I just can’t agree with this way of thinking right here in Greater Boston. Real estate is local and our home prices are significantly higher than most areas of the country. A 1% increase in interest rates translates to about 10.75% reduction in borrowing power. The average price in Newton is now over 1 million dollars. The COST of a 1 million dollar house will now cost 10.75% more per month. If a buyer were to put down 20% on a million dollar house and mortgage 800,000 at 4.5% on 30 year fixed rate a monthly payment would be $4,053.00 at 5.5% the payment goes to $4,542.00. Now I know many/most are saying who cares if someone can afford an $800,000.00 mortgage, they can afford an extra 500.00 a month or $6,000.00 per year. Believe me, most people borrow to their upper limits. The new lending guidelines state that all of your monthly expenses: mortgage, taxes, car payments, insurance, student loans can not exceed 43% of your GROSS income. Something will have to give…..

The Impact of Increasing Mortgage Rates on Prices

Many pundits are warning that there will be a drop in real estate values because mortgage rates are beginning to increase. The logic makes sense. However, history shows that increasing rates have not negatively impacted home values in the past.

Four times over the last 30 years mortgage interest rates have dramatically increased. Here is the impact the increases had on home values at the time:

Dates

Mortgage Rate

Home Values

May ‘83 – July ‘84

12.63 – 14.67

+ 6.6%

March – Oct ‘87

9.04 – 11.26

+ 5.2%

Oct ’93 – Dec ‘94

6.83 – 9.2

+ 1.2%

April ’99 -May 2000

6.92 – 8.52

+ 10.9%

Perhaps the impact of increasing rates on future home prices won’t be as dramatic as some are predicting.

Sellers the housing market in Newton is in dire need of listings. We currently have only 53 single family homes for sale. That number is so low it’s ridiculous! A normal market in Newton is roughly 175-200 homes across all price ranges. During the recession we had closer to 400 homes for sale. Contrary to what most sellers think, April is not the best time to sell your house, January and February are the best months. Why? Because the inventory is usually lower and buyers are out in full force. This is a supply and demand business. Are you waiting for interest rates to rise? It is so important to remember that a 1% rise is rates decreases purchasing power by 10.75%. How many of you don’t think interest rates will rise this year?

I have attached a chart below with what is currently on the market, what has gone under agreement and what has sold in the past month. Anything under 1 million dollars is flying off the market, the 1 million to 1.5 million is HOT and we can pretty much forget about the over 3 million market for the time being. More on that market in another post.

Please, if you have though about selling your home, do it. Get those rooms cleared out, put a fresh coat of paint in drab rooms, keep de-cluttering, but just do it!

In 2013, the housing recovery was a welcome bright spot for the economy: prices were shooting up, fewer homeowners were underwater, and builder confidence was finally on the upswing. It’s looking like 2014 should be another good year for housing–mostly. Here are ten things housing experts expect to see in 2014:

1. More homes will be available
Short supply drove rapid price increases at the beginning of 2013, but watch for that to change next year. Realtor.com notes that the inventory (homes available for purchase) shortage began to soften in February. New construction and rising prices should bring more homes, both new and old, on to the market in 2014, helping inventory return to traditional levels.

2. Mortgage rates will rise
Online real estate database Zillow predicts rates will hit 5% by the end of 2014–well up from the 4′s and 3′s of late, but still well within normal levels. New Fed Reserve chief Janet Yellen is expected to continue Ben Bernanke’s policy of keeping mortgage rates low by buying blocks of mortgage-backed securities, but the Fed’s bond-buying taper could push rates higher. “While this will make homes more expensive to finance – the monthly payment on a $200,000 loan will rise by roughly $160 – it’s important to remember that mortgage rates in the 5 percent range are still very low,” says Erin Lantz, Zillow’s director of mortgages. Really. “Prior to the Federal Reserve’s 2008 decision to buy $85 billion in debt per month, the 36-year average was 9.2%, and never below 5.8%,” notes Glen Kelman, CEO of Redfin.

Zillow: National mortgage rates, 30-year, fixed-rate

3. Mortgages will be easier to get
“The silver lining to rising interest rates is that getting a loan will be easier,” says Lantz. “Rising rates means lenders’ refinance business will dwindle, forcing them to compete for buyers by potentially loosening their lending standards.”

4. Home prices will rise 3%
Redfin and Zillow are predicting that home prices will rise between 3% and 5% in 2014. For comparison’s sake, 2013 saw jumps of 5% nationally, with increases of more than 20% in some hot spots. “These gains, while beneficial in many ways, were also unsustainable and well above historic norms for healthy, balanced markets,” says Dr. Stan Humphries, Zillow’s chief economist. “This year, home value gains will slow down significantly because of higher mortgage rates, more expensive home prices, and more supply created by fewer underwater homeowners and more new construction.”

5. Fewer homeowners will be underwater
Rising prices helped 2.5 million homeowners with underwater mortgages regain positive equity status during the second quarter of 2013, according to Realtor.com. By Q3, a CoreLogic report found that about 6.4 million homes were still in negative equity at the end of Q3. Watch for that number to shrink in 2014.

6. Affordability will decline
Despite the slower pace of price increases, home affordability will decline as mortgage rates rise. The real culprit is income levels, which aren’t keeping pace with the increases in housing costs. In 2013, the National Association of Realtors’ Home Affordability Index dropped to a five-year low. Experts predict the trend will continue in 2014.

7. Ownership will decline
In 2014, Zillow predicts, homeownership rates will fall below 65 percent for the first time since 1995. “The housing bubble was fueled by easy lending standards and irrational expectations of home value appreciation, but it put a historically high number of American households – seven out of ten – in a home, if only temporarily,” says Humphries. “That homeownership level proved unsustainable and during the housing recession and recovery the homeownership rate has floated back down to a more normal level, and we expect it to break 65% for the first time since the mid-1990s.” Watch also for adult children to move out of their parents’ homes, starting their own households and further decreasing the overall homeownership rate.

8. Americans will move
Rising prices, a reversal of underwater mortgages, and easier credit will free Americans up to move. But next time they’ll choose smaller homes in more affordable locations. Redfin is predicting that new lending regulations–which make it harder to borrow more–will send Americans to less expensive hubs like Portland, Denver, Austin, Richmond, Dallas, Houston, San Antonio, Atlanta, and Raleigh.

9. Foreclosures will fade
The once booming foreclosure market has slowed, with September 2013 the 36th straight month of year-over-year decreases in foreclosure activity, nearly 33% down from the end of 2012. The declines should continue with the overall housing recovery.

10. Home buying process less crazed
During the bust, investors bought as many as one out of every five homes in America, according to Redfin. The perfect storm of increased inventory, higher prices, and fewer foreclosures means that investors are stepping out of the buying market, giving way for regular folks. Add to that the loosening credit rules, and the housing buy market begins to look more normal. “All in all, more inventory, less competition from investors, and more mortgage credit should all make the buying process less frenzied than in 2013,” says Kolko of Trulia

If you know anyone who is looking to buy, sell or refinance a home, please forward their name and telephone number to us. We will happily provide the same high level of service that we have provided to you. The greatest compliment you could possibly give us is the referral of your friends and family.